Nvidia, a leading semiconductor company in the artificial intelligence sector, will replace Intel on the Dow Jones Industrial Average, according to an announcement from S&P Dow Jones Indices on Friday. This change, effective November 7, ends Intel's 25-year presence on the blue-chip index, highlighting a major shift in the semiconductor industry as AI reshapes priorities in the market.
Sherwin-Williams, a well-known paint manufacturer, will also replace Dow Inc., a chemical producer, on the 30-stock index. S&P Dow Jones Indices stated that the changes "were initiated to ensure a more representative exposure to the semiconductors industry and the materials sector respectively."
The replacement of Intel with Nvidia underscores Nvidia's growing influence amid rising demand for AI applications, while Intel, once a dominant chipmaking force, has struggled to retain market share. Intel's shares have plummeted 54% this year, making it the worst-performing stock on the Dow. Following the announcement, Intel's shares fell 1.6% in extended trading on Friday, while Nvidia's shares rose by 2.2%. Susannah Streeter, head of money and markets at Hargreaves Lansdown, observed, "Losing the status of Dow Jones inclusion would be another reputational blow for Intel, as it grapples with a painful transformation and loss of confidence."
Intel, founded in 1968, initially focused on memory chips before shifting to processors, helping launch the personal computer industry. Its "Intel Inside" branding, popular throughout the 1990s, turned its products into premium commodities and made the logo ubiquitous on laptops. However, Intel has missed out on several key opportunities in recent years, including investments in AI, and it has also lost its manufacturing lead to competitors like TSMC. The company's valuation has now fallen below $100 billion for the first time in 30 years, in stark contrast to Nvidia, which is valued at $3.32 trillion, making it the world's second-most valuable company.
Nvidia has seen a rapid rise in popularity for its graphics processing units (GPUs), which were initially sought after by gamers but have now become essential for AI data centers and generative AI technologies. The company's stock has surged seven-fold over the past two years, positioning Nvidia as a key indicator of growth within the AI market.
S&P Dow Jones Indices also announced a change in the Dow Jones Utility Average, with Texas-based energy company Vistra set to replace Virginia's AES Corp. in a continued effort to maintain sector representation.
Intel recently expressed optimism about its PC and server businesses, projecting revenue above estimates for the current quarter. CEO Pat Gelsinger acknowledged the challenges ahead, noting that Intel has "a lot of work to do." Analysts are projecting Intel's first annual net loss since 1986, signaling deeper challenges for the company. Streeter noted that this change in status "would also mean that Intel is not included in exchange-traded funds (ETFs) which track the index, which could impact the share price further."
